Decentralization of forest management aims to empower local communities. Intentions notwithstanding, decentralization is a historically-contingent process that does not necessarily result in synergistic state?community relationships. Decentralizing governance structures implies changes in power relationships, but an understanding of power and its dynamics in forest management situations is lacking. In addition, governance outcomes of decentralized forest management in a state?community institutional configuration are unclear. Understanding how instances of decentralized community-based forest management (CBFM) operate and how participants perceive the governance outcomes of this system is needed to improve governance structures and processes. The case of CBFM in Madagascar is used to explore the power dynamics of decentralized governance of forests. In Madagascar, the government has adopted a policy known as Contractual Forest Management to achieve community-based forest management. Data collection took place in two phases. To understand forest-related interests, I conducted semi-structured, open-ended interviews of community members in eight villages in the Menabe region, state forest agents at the local and national level, and participating NGO staff from two NGOs at the local and national level in Menabe and Antananarivo, Madagascar (n=55). I also conducted participant-observation and document review. The second phase involved a quantitative survey of participants in 12 CBFM contracts in Madagascar (n=621). Findings suggest that all three categories of actors (i.e., community members, forest agency staff, and NGO employees) are generally satisfied with governance outcomes of CBFM, with forest agency staff the least satisfied. Overall, decentralization of forest management in Madagascar has had a more tangible effect on institutional-level relationships than on individual-level capacity to act. It has not ?empowered? local communities. Rather, it begins to open a space in which individuals, located in various social positions, can act to transform pre-existing power relations.